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Report Disputes Christie’s Basis for Halting Tunnel

Gov. Chris Christie of New Jersey exaggerated when he declared that unforeseen costs to the state were forcing him to cancel the new train tunnel planned to relieve congested routes across the Hudson River, according to a long-awaited report by independent Congressional investigators.

The report by the Government Accountability Office, to be released this week, found that while Mr. Christie said that state transportation officials had revised cost estimates for the tunnel to at least $11 billion and potentially more than $14 billion, the range of estimates had in fact remained unchanged in the two years before he announced in 2010 that he was shutting down the project. And state transportation officials, the report says, had said the cost would be no more than $10 billion.

Mr. Christie also misstated New Jersey’s share of the costs: he said the state would pay 70 percent of the project; the report found that New Jersey was paying 14.4 percent. And while the governor said that an agreement with the federal government would require the state to pay all cost overruns, the report found that there was no final agreement, and that the federal government had made several offers to share those costs.

Canceling the tunnel, then the largest public works project in the nation, helped shape Mr. Christie’s profile as a rising Republican star, an enforcer of fiscal discipline in a country drunk on debt. But the report is likely to revive criticism that his decision, which he said was about “hard choices” in tough economic times, was more about avoiding the need to raise the state’s gasoline tax, which would have violated a campaign promise. The governor subsequently steered $4 billion earmarked for the tunnel to the state’s near-bankrupt transportation trust fund, traditionally financed by the gasoline tax.

On Tuesday, in a speech at a conference on taxes and the economy in Manhattan, Mr. Christie did not mention the report, but defended his decision to cancel the project, saying, “I refuse to compromise my principles.”

He also derided the tunnel plan, although he had said even as he canceled it that he believed in its merits. While the tunnel would have expanded the number of subway lines available to commuters at Pennsylvania Station in New York, Mr. Christie characterized it Tuesday as a dead-end to a department store.

“When they want to build a tunnel to the basement of Macy’s, and stick the New Jersey taxpayers with a bill of 3 to 5 billion over, no matter how much the administration yells and screams you have to say no,” he said at the conference hosted by the George W. Bush Institute, before an audience that included Mr. Bush, Karl Rove, and prominent Republicans and business executives. “You have to look them right in the eye, no matter how much they try to vilify you for it, and you have to say no. You have to be willing to say no to those things that compromise your principles.”

Mr. Christie’s estimates of several billion dollars in cost overruns refers to an $8.7 billion estimate that was used for a grant agreement between the federal government and the state to get the project started in early 2009, and was often referred to in news accounts as the price tag on the project. But the federal report noted that federal and state officials, including those in Mr. Christie’s administration, had long been preparing for the possibility that costs might range from $9.5 billion to $12.4 billion. Mr. Christie’s administration, however, argued that the upper estimates were excessively cautious.

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Gov. Chris Christie said he canceled a project because of cost concerns.Credit
Mel Evans/Associated Press

A spokesman for the governor, Michael Drewniak, said Mr. Christie’s statement of costs had included $775 million to build a new portal bridge, which was required as part of the project. The 70 percent state share, he said, included the costs that would have been paid for by the Port Authority of New York and New Jersey, which is run by both states, as well as federal highway and stimulus funds earmarked for New Jersey. Counting those costs, which the report does not do, would put the state’s share at 65.5 percent.

As for the state’s share of the overruns, Mr. Drewniak said the federal government “offered no significant increase in outright funding that would significantly mitigate the costs to New Jersey.”

“The bottom line is that the G.A.O. report simply bears out what we said in the fall of 2010 and say to this day: the ARC project was a very, very bad deal for New Jersey,” he added, using the acronym for the project, known as Access to the Region’s Core.

Martin E. Robins, the founding director of the Alan M. Voorhees Transportation Center at Rutgers University and an early director of the ARC project, criticized the governor. “In hindsight, it’s apparent that he had a highly important political objective: to cannibalize the project so he could find an alternate way of keeping the transportation trust fund program moving, and he went ahead and did it,” he said.

Shutting down the tunnel project extinguished the best hope to relieve the increasing congestion not only between New Jersey and Manhattan, but also along the popular high-speed route between Boston and Washington. Now, Amtrak and New Jersey trains share two 100-year-old single-track tunnels under the Hudson. As the report notes, those tracks now operate at capacity, and demand for mass transit between New Jersey and Manhattan is expected to grow 38 percent by 2030.

One 15-minute disruption, the report said, ripples out to affect 15 other Amtrak and New Jersey trains. Last month, problems on the two tracks on two consecutive days sent delays rippling out along the Northeast.

The governor said when he canceled the project that he hoped New York City or federal officials would find another solution But last week, the chairman of the Metropolitan Transportation Authority said one of those, a proposed extension of the No. 7 subway line to New Jersey, was not going to happen “in anybody’s lifetime.” Congress gave Amtrak $15 million to study a tunnel that would expand capacity by about half as much as the ARC project, but the money to build the tunnel is uncertain.

The Government Accountability Office, the nonpartisan investigative arm of Congress, did the report at the request of Senator Frank R. Lautenberg of New Jersey, a Democrat who is the chairman of the Senate subcommittee on surface transportation, an ardent supporter of public transportation and a critic of Mr. Christie. Investigators spent a year examining official planning studies and estimates for the project and interviewing people associated with it.

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In North Bergen, N.J., the entrance to the Hudson River rail tunnel that was being built.Credit
Fred R. Conrad/The New York Times

Mr. Christie supported the tunnel in his campaign in 2009 and in letters to the federal Transportation Department as late as April 2010, four months after he took office. When he canceled it, he said that he supported the merits of the project, but that the state could not afford it, and that he would not put New Jersey taxpayers on “a never-ending hook” to pay for it.

In announcing his decision, Mr. Christie said he was relying on the advice of his ARC steering committee, led by New Jersey Transit officials, which he said had revised estimates and found that the tunnel would “cost no less than $11 billion and could exceed $14 billion.”

The report, however, found that the estimates had not changed since August 2008, 17 months before Mr. Christie took office. New Jersey Transit and federal officials had agreed on a baseline cost of $8.7 billion, which was the figure cited in news reports, but they had also agreed, first in 2008 and then a month before Mr. Christie canceled the project, that costs would range from $9.5 billion to $12.4 billion. When federal officials argued, six weeks before Mr. Christie canceled the project, that it might cost $13.7 billion, the report said, state officials replied that they “did not see costs rising to this level” and said the project would cost, at most, $10 billion.

Federal officials, in response, backed off that higher estimate. But Mr. Drewniak, the spokesman for Mr. Christie, said Monday that the fluctuating estimates suggested that no one really knew how much the project would cost.

“The governor was prudent to cancel the project, given the vast disagreement between professionals,” he said.

Mr. Christie further explained his decision by saying that the financing agreement with the federal government required him to declare that New Jersey would pay any costs above the $8.7 billion. That is the standard procedure for full-financing agreements, but the report found that there was no agreement when Mr. Christie canceled the project, and that the federal government, which was already paying 51 percent of the costs, had offered to help with any cost overruns, pledging additional money, low-interest railroad loans and public-private financing.

Before Mr. Christie declared the tunnel dead, his transportation advisers told state legislators that they had discussed taking money from the project to fill the transportation trust fund, which was almost empty.

Since then, the governor has steered $4 billion in tunnel money to the trust fund, avoiding an increase in the state’s gasoline tax, the second lowest in the nation.

Mr. Drewniak criticized Mr. Lautenberg for the report, saying that he should have arranged more federal money for the project. “He needs to stop blaming others for his failure in leadership,” he said.

A version of this article appears in print on April 10, 2012, on page A18 of the New York edition with the headline: Report Disputes Christie’s Basis for Halting Train Tunnel. Order Reprints|Today's Paper|Subscribe